Regulation hitting small firms

Regulation hitting small firms

July 25, 2011 11:04 AM

The Forum of Private Business (FPB) have released a new report, the latest in their quarterly Referendum series of member surveys. This one is about the cost of compliance with regulation from health and safety to employment law and PAYE and National Insurance. The FPB represent small firms who often particularly struggle with these requirements and incredibly regulations are costing the UK's 1.17 million micro, small and medium sized employers an average of £25,500.

That means huge amounts of staff time that could have been spent growing the business, creating new job opportunities. Billions spent on external help to deal with the more complicated rules, and make sure they are getting things like tax right. The most onerous areas are health and safety, employment law and tax.

Health and safety regulations need to be closely scrutinised. Any that have been in place for more than five years should be assessed to see if they have altered the trend in that area, has it actually made people healthier or reduced accidents? The FPB found the cost of health and safety regulation is still rising which is incredible with manufacturing in long term decline as a share of employment. It is also a particular problems for small but growing firms as the cost becomes a lot greater when they employ their fifth person, and face new requirements. Do we want to put small companies off growing like that?

In employment law politicians really need to appreciate that what they think will "protect" jobs will often actually just stop people getting hired in the first place. Small businesses in particular need flexibility to limit the financial risk when they take someone on.

Reducing the complexity of the tax system is difficult but vital. That's why we are running the 2020 Tax Commission which is going to set out a radical plan to reform taxes to improve incentives and make the whole system a lot simpler.

Too often calls to cut sharply cut red tape remain vague and therefore unproductive. Hopefully with the 2020 Tax Commission and other projects we can start to set out concrete proposals to make Britain an easier place to grow a small business, and create new opportunities.The Forum of Private Business (FPB) have released a new report, the latest in their quarterly Referendum series of member surveys. This one is about the cost of compliance with regulation from health and safety to employment law and PAYE and National Insurance. The FPB represent small firms who often particularly struggle with these requirements and incredibly regulations are costing the UK's 1.17 million micro, small and medium sized employers an average of £25,500.

That means huge amounts of staff time that could have been spent growing the business, creating new job opportunities. Billions spent on external help to deal with the more complicated rules, and make sure they are getting things like tax right. The most onerous areas are health and safety, employment law and tax.

Health and safety regulations need to be closely scrutinised. Any that have been in place for more than five years should be assessed to see if they have altered the trend in that area, has it actually made people healthier or reduced accidents? The FPB found the cost of health and safety regulation is still rising which is incredible with manufacturing in long term decline as a share of employment. It is also a particular problems for small but growing firms as the cost becomes a lot greater when they employ their fifth person, and face new requirements. Do we want to put small companies off growing like that?

In employment law politicians really need to appreciate that what they think will "protect" jobs will often actually just stop people getting hired in the first place. Small businesses in particular need flexibility to limit the financial risk when they take someone on.

Reducing the complexity of the tax system is difficult but vital. That's why we are running the 2020 Tax Commission which is going to set out a radical plan to reform taxes to improve incentives and make the whole system a lot simpler.

Too often calls to cut sharply cut red tape remain vague and therefore unproductive. Hopefully with the 2020 Tax Commission and other projects we can start to set out concrete proposals to make Britain an easier place to grow a small business, and create new opportunities.

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